Columbus Business Daily

Can anyone help me with the acctg. question?

Question: Yuor manager instructs you to record 2002 sales in 2001. You're told this adjustment is fine, since it will correct itslef by the end of 2002. Is this practice considered fraudulent? Why or why not? Possible answers: a) No, because it will correct itself b) No, because it's considered earnings management c) Yes, because net earnings will be incorrect for two years, thus misleading investors. I am leaning towards answer C. Does anyone have an idea?

Public Comments

1. C would be the correct general answer
2. C is correct. It is misleading plus there is no way a company accountant would have known the predicted sales in 2002 - so it would make all earnings incorrect misleading investors.